How would it feel to knock out your bucket list…..way before you kick the bucket?

When someone thinks of a bucket list it is only natural to think well into the distant future. Treating these dream items as distant wishes. I’d like to prescribe to you that you can begin dipping into that bucket list today!

 

Your Bucket List Today
Quite a while back I was fortunate to be invited into an elite study group. The study group consisted of many friends/peers who were leaders from around the country within the financial planning field. Our group, which was called Top Gun School, followed Dan Sullivan’s Strategic Coach Curriculum. If you aren’t familiar with Dan Sullivan or The Strategic Coach; I’d encourage you to make the investment in yourself. The investment is substantial however the return on investment is immeasurably life altering.

There were numerous exercises and growth moments throughout the eighteen month course, however one session in particular has always stood out. The idea that your dreams are actually much closer than you realize.

The exercise is quite simple. As with anything important its the execution that makes all the difference.

We began by taking a couple of hours in solitude to list all that we wanted to accomplish in our lives. Categorically we segmented the list into short term, medium and longer term objectives. A bucket list of sorts.

This is where the excitement grew for each of us. We began to list the necessary steps to make each of these dreams or big ideas become a reality. Next we began placing time frames/deadlines around each of our next steps. For many of us we began to envision completed projects or the coming fulfillment that was once a dream and now was a certainty

There was a realization that many items were well within reach in the near future when we simply prioritized our time and energy towards completion. It wasn’t long before we began sharing stories of monies raised, trips planned or simply the groundwork being laid out on some really big ideas.

I certainly don’t want to oversimplify the process. However, I firmly believe that when action items are applied to ideas results will surely follow. Michael Hyatt says it this way, “With action comes clarity.”

At Drive Planning we use the phrase (even hashtag) Be Intentional! The exercise that our Top Gun Group went through simply taught us to Live with Intention. Having an instructor, Kevin Murphey, whom we all looked up to and admired to hold us accountable certainly made a huge impact on each outcome. The best in any sport or field have coaches and mentors.

I want to invite you to create that Bucket List and begin reeling it a bit closer each day, week or month. Find a mentor/coach to push you. If our Be Intentional Package will help you, well all the better.

 

Just get started!

Happy Advicegiving

November 22, 2018 — 29 Comments

The Thanksgiving and Christmas holidays are, by far, my favorite time of the year. There is cheer in the air and an overall feeling of generosity. Being in the financial field for the past 21 years I have also learned that this is the time of the year when advice is handed out most freely.

So take this as a word of caution for this “Advicegiving Season.”

Most of this advice is well intentioned however often unsolicited. It typically happens when the large meal of the day is finished, politics has been exhausted and the football games are winding down. Now enter the “rich uncle”, you know the one, everybody has one. (And they aren’t always rich) I can say everybody has one regardless of your economic situation or even knowing you. The rich uncle or relative is the guy that likes to tell you all of his huge successes throughout the year, whether they are real or not.

It almost always starts with a philanthropic tone of, “you should get into _________.” It starts this way so that everyone in the room feels like, wow! He is looking out for me or I am getting an inside tip. Then this person drones on and on about how well it has done. If it were to stop there I probably wouldn’t be even mentioning this non-event. Unfortunately, it doesn’t always stop there.

As I mentioned being in the financial field; Now I get to hear about all of these huge successes in the weeks following each of the holidays. It has happened repeatedly for the past 21 years. Which is both great and unfortunate?

It’s great to hear about these ideas/investments because I love to hear new ideas. Great because there are things out there that genuinely successful people do that I want to know about and be involved. Trust me, I certainly don’t claim to know it all and I also spend a great deal of time each year researching and learning anyways.

The unfortunate part is when it derails a financial plan that was totally on the right track. Unfortunately many of these proclaimed investment ideas aren’t always entirely true or even understood. Never does the afore mentioned rich uncle take the time to understand if his idea, be it good or bad, is appropriate for the season of life of the recipient or fits in to their overall goals.

So this holiday season take the advice and be gracious. However, I would caution you to think through who is giving the advice. Have they been successful? Are they in a different phase of life than you? Are their values in line with yours? Most importantly make sure that you overlay this advice with your well-coordinated plan to ensure that it fits into your families’ hopes and dreams.

Best of luck this Advicegiving season! I would encourage you to stick with throwing the football with the kids after lunch.

 

Do you have that Uncle? Let us know, maybe it would be even be fun to tag them on twitter or facebook as you respond:) 

 

Happy Holidays!

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The recent increases in the real estate market has sent more and more first time real estate investors to Drive Planning. One of the common questions that we receive is centered around purchasing real estate (either to flip or rental/buy and hold) inside of a Qualified Retirement Plan, such as an Individual Retirement Account (IRA) or other types of plans.

This is most common for those who do not have funds which are outside of their Retirement Plan. So, a better question is, Where else can I get funding for my real estate deal? There are numerous sources for funds if you know where to look, regardless of credit!

Real Estate - Retirement Plan

Let’s Take a Look at The Problem

For the remainder of this blog I want to focus on why purchasing real estate inside of an IRA is a poor idea.

An IRA is a tax shelter. Tax on the income is either deferred (Traditional IRA) or eliminated entirely (Roth IRA).

Rental real estate is an example of a type of real estate investment that can be a tax shelter on its own. Rental real estate often generates losses for tax purposes even when there is positive cash flow. This is because of the depreciation deduction that can be taken on the investment.

With proper tax and accounting, rental losses can be used to offset other income which effectively shelters that other income from income tax. This can result in significant tax savings.

If an IRA has rental losses, the IRA is generally not paying tax so there is no tax to shelter.

If an individual has rental losses, there is an opportunity to shelter other income, including W-2 or business income, from income tax. This results in not paying tax on that other income and those tax savings mean cash in your pocket.

Lastly, in retirement any proceeds from real estate inside of an IRA (Traditional) comes out as ordinary income!

In addition, these problems also come along with Real Estate purchased within an IRA/Qualified Plan:

  • Lose 1031 Tax Free Exchanges
  • Lose “Step Up in Basis” at Death
  • No Capital Gains Tax Rates
  • Potential Increase in Tax Rates
  • Lose enjoyment/use of funds prior to age 59 1/2 (Proposed/Potentially to be age 70 1/2 in the future)

The Bottom Line

Our team at Drive Planning has over 250 years of experience with situations like we’ve described above; therefore we believe that the tax savings are too significant so the property should be purchased outside of a qualified plan. Let us help you to find the money.

We would love to assist you with any financial decision and making sure that you are coordinating it into your overall financial plan.

Tax planning and advice should be reviewed by your personal tax advisor. The staff at Drive Tax and Accounting and Tom Wheelwright, CPA contributed to this article.