Still More Money Secrets
By Steve Gillman
This website focuses on the more unusual ways to make and
save money. But even when we go beyond making more and spending
less to cover financial news and information in general we try
to have something you haven't heard of before. The collection
of money secrets below will
show you why homes are advertised for sale without prices, how
to make your kids's allowances tax deductible, and how many billionaires
didn't bother getting a college degree. First, we look at some
under-reported news from a couple years ago...
Man-Made Diamonds Are Better?
According to an article in Wired.com
manufactured diamonds are here, and they are much cheaper than
natural diamonds. What's the difference then? Lab manufactured
diamonds are flawless. Natural diamonds normally have slight
imperfections. Most dealers and cutters could never tell the
difference. When these laboratory creations first hit the market
almost a decade ago, wired.com had a reporter show a few to an
expert in Antwerp, Belgium, who said they were worth $10,000
to $15,000. The reporter then told him they were made in a machine
in Florida, at a cost of less than $100 each.
Once the news was out, De Beers Diamond Trading Company of
London, which has had a virtual monopoly on the wholesale diamond
market for many years, set up its Gem Defensive Programme. This
involved warning the public about these non-natural diamonds
(as though it is a problem that they are flawless). The company
also started supplying dealers with sophisticated machines that
can distinguish manufactured from mined gem stones. In other
words, for the average person - or even the average jeweler -
there is no easy way to tell the difference. So why pay much
more for a flawed stone when you can get a man-made one. Online
you can buy rings made with lab-created diamonds from places
Tax Deductible Allowances for Kids
If you have any tasks in your business which your children
are capable of doing, you can pay them and deduct the expense
- instead of just giving them money. This is good for the kids
and good for you at tax time.
Check with your accountant for any recent rule changes and
to see what the annual limit is before they have to pay tax on
the income. For the deduction to be allowed the pay has to reasonable.
Just make it minimum wage and you should have no problem..
The places that advertise on television are just about the
worst when it comes to getting money from your gold jewelry or
coins. Consumer reports found that they pay an average of only
11% to 29% of melt value. You should probably never take less
than 50%, and there are places that regularly pay up to 70%.
That means you can get up to six times as much for your gold
if you shop around.
Start with your local coin shop. Many of these pay over 50%
of the melt value. Jewelry stores also generally pay more than
the television buyers. The price of gold can vary a lot in a
matter of a week, so to compare your options fairly, call all
the possible places on the same day to ask what they pay. You
can determine the amount of gold in your jewelry by weighing
it, noting the karat mark on it (if there is one), and then using
the calculator at http://www.dendritics.com/scales/metal-calc.asp
. You can also check the spot price of gold and other metals
Early IRA Distribution Secret
Normally if you take money out of your IRA account before
age 59 1/2, you have to treat it as normal income and pay taxes
on it plus a 10% penalty. However, there are some loopholes that
can help you avoid the high cost of early withdrawals.
For example, if you use the money (subject to a $10,000 lifetime
limitation) to buy your "first" home you can avoid
paying the 10% penalty. It's important to note that this "first
time homebuyer" exception applies to anyone who has not
owned a home in the previous two years. Also, there are circumstances
related to disability that may qualify you for penalty-free withdrawals.
These rules may change, and there are other stipulations (like
a deadline for using the money after you take it out), so seek
advice from a tax professional.
Another secret to low-cost withdrawals is to take them when
your income is low enough to reduce your tax rate. For example,
if your normally paying a 28% marginal tax rate, but because
of a layoff or other income reduction you'll only be paying 15%
this year, your total cost to take money from your IRA - assuming
you take only enough so you are still in that 15% bracket - would
be 25% of it; 10% for the penalty and 15% income tax, That's
less than the 28% you would have paid just in income tax in other
years. This refers only to federal taxes, of course.
If you are self-employed and happen to be showing a loss for
the year for your business, you could take $10,000 out of your
IRA and pay only the 10% penalty, since your total income would
still be less than your standard deduction and so no income tax
will be due. This is true only for traditional IRAs, however.
Ask your tax preparer about loopholes for Roth IRAs.
Negotiating is full of emotional elements and needs. One of
the most important is the need for a negotiator to feel he has
done well - that he's "won" something. He won't get
that feeling if he asks for ten things and you casually say,
"okay." Even with points you can easily concede, be
stingy in your concessions, so the other side can go to battle
and emerge victorious. They will be more likely to give you what
you really want if they feel they have already "won"
on many points.
You can also use each concession to get a bit for your side.
If there are things you win, but don't need, these can be offered
up later in order to get what you really need.
The No-Price Money Secret
You have probably seen the ads in the paper for homes for
sale that don't have prices listed. What do you do? Sometimes
I may call, but there are so many homes to look at that I often
just skip over these ones. So how did leaving the price out help
the seller? It didn't.
If the price was there, callers would already be somewhat
pre-qualified to buy the home, since they often know what they
can afford. Of course those who are looking for less expensive
homes wouldn't call, which is fine if an owner is selling it
on his own. Why waste time, right? And why risk losing a sale
to people like me who skip over non-priced homes?
The truth? This is a prospecting tool for real estate agents.
It is good to have people call out of curiosity. When they find
that the home isn't right for them, the agent can steer them
to another listing that he can make money on. Meanwhile who cares
if they lose a potential buyer or two for the home in question?
You should care, if you are the seller. Agents have enough
ways to get buyers for other properties. Personally, I insist
that they put the price of my home in their advertising.
Tracking Your Gambling
What happens if a person loses thousands of dollars at casinos
over the course of a year, and then wins a $3,000 jackpot from
a slot machine? In many cases the winner pays taxes on the whole
amount because the offsetting losses have not been documented.
To avoid this the IRS suggests that you keep receipts for lottery
tickets, canceled checks written at casinos and so on. ATM receipts
sometimes are allowed as evidence of loss as well if they are
from a gambling location (casino, horse racing track, etc.).
A detailed diary of wins and losses can help prove your case
too. The latter is just a good idea in any case, so you can see
what your habit/hobby really costs.
Warren Buffet has a Master's degree in science, but was it
important to his investing success? It is difficult to say, although
we know that he was entrepreneurial from a young age and was
already making good money before completing his college education.
What we also know, according to a recent article in Forbes magazine
(January 16, 2013), is that of the 400 richest people in the
United States, 63 do not have a college degree of any sort. Education
is obviously important (you have to learn something to get rich),
but formal education may not be as crucial as many people
think. In fact, it is hard to imagine that Bill gates would have
even 1% of his current net worth (which is over $50 billion as
this is being written) if he had chosen to stay in Harvard rather
than drop out to create Microsoft.
On the other hand, he did go to Harvard for a while, and the
contacts one makes can matter. In fact, more than 5% of the world's
billionaires went to Harvard. Completing a degree may not be
that important then, but meeting the right people always helps.