My Wealth Journey

The tension between Iran and the UK has increased the price of oil the past few days to over 66 bucks a barrel. A quick way to make some money is to buy in the energy sector such as Suncor (SU) or VLO.  Some believe that if Iran refuses to release the soldiers, and UK and the UN or the US attacks Iran, we could definitely see oil jump to close to $100 a barrel! Then again, if Iran gives in, we can see oil drop by $5 a barrel easily. To me, there is more upside than downside risk, so I’ve put money on a few energy stocks. Even if they go down a bit, I’m still bullish on energy.

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So after a bit more than 4 years, I decided that I needed a job change. Our company recently underwent a change in management and I was told my duties would start to include a little higher level rather than just straight programming. Close to 3 months later, nothing has changed, I’m not really included when they talk about the business even though I’ve been one of the employees that have been there for a while in comparison with the others.

I plan on giving my 2 weeks early next week. I expect them to offer me something in return to stay but I doubt I would take it. I need a new place and new environment.

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I have a number of websites that I run where I go with the cheap under $5 a month hosting plans. Most of the time, these hosting companies are small one or two man shops. I’ve had two sets of sites be down for over 5 days because I kept on believing they would eventually fix the issue with their servers. Fortunately, these sites weren’t real money makers for me but they were still profitable so I was losing money in the end.

I finally signed up with another host and moved the sites off the servers that were down. When you choose to go with cheap hosting companies, you do need to check in on your sites every now and then to ensure they are up, especially if you have a pump and dump site as many of you affiliate marketers may have.

You get what you pay for.

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Over 18 months ago, I put $1,000 down in deposit to hold my spot in line to purchase a condo in Park City at the Westgate Lodge. I never really intended to buy anything because you would have to come up with over 50% of the purchase price to cashflow. I didn’t want to count on appreciation like I did for a few of my other properties. The sales event came and gone. I don’t recall the exact prices, but I do remember 1 or 2 bedroom condo going for as much as $700,000. I kept on getting flyers, emails, phone calls from the sales agents regarding the condos.

Fast forward 18 months, I get another email with the subject, “Westgate: Studios Unexpectedly Available!” Please! Unexpected? They probably have been available all this time.

I haven’t been following the Park City real estate market, but the point is, don’t buy into any marketing gimmick any real estate agent tries to sell to you no matter how sincere they may seem. They don’t get paid unless you buy.

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As I was driving to work this morning, I heard an interest ad that I’ve heard a few times before from the NAR. The radio ad was talking about how it is a buyer’s market, lots of homes to choose from, blah blah, and said every market is different.

My question to the NAR, when is it not a good time to buy or is it always a good time to buy? They seem to always come up with some spin to convince people that it is a good time to buy. I was just reading in the paper the other day about some protesters in Orange County who felt they were talked into buying a new home because the sales agent told them the prices will not be reduced in later phrases over a year ago. Something tells me that the builders will continue to reduce prices and homeowners who purchased homes in the past will not be happy.

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This is why you should carefully screen your tenants, especially for Section 8.

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I got back my tax return for my personal and corporation from my CPA and I’m getting money back this year instead of owing money! To be fair, I made more money from my affiliate marketing in 2005 than 2006 but I also was able to take advantage of my rental properties’ depreciation and added money to my SEP IRA to reduce my taxes I would have to pay. The CPA charged $600 for the corporate return and $250 for my personal.

For those of you who don’t have real estate holdings, see if you can pick up something that cashflows to take advantage of depreciation and build up equity. Finding properties that cashflow will be tough unless you head to the midwest and put down 5-20% on a property. Again, don’t buy a property solely for tax depreciation but if the deal makes sense, and can get a good deal, a rental property is great come tax time. Obviously, be careful about buying homes in warzones and areas you wouldn’t feel comfortable living in unless you feel you can handle it. My holdings are all out of state so I try to avoid those area. There are people who make a ton of money buying in warzones but I don’t think I have the heart for it.

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I have a gambling nature. Not the kind that likes to go to the casino and just gamble away thousands of dollars but I love taking chances when it comes to money. Last week I shorted AKAM at the wrong time and ended up losing about $1,200 in a few days. Note to self, never short something when just about everyone and their mom are bullish on the stock.

On Tuesday, I decided to short New Century (NEW) and made back around $700 today when the stock just plunged. I do realize this isn’t a bright idea but I only do this with less than 10% of my SEP IRA.  Losing any amount of money hurts… I just bought a bit of money to my SEP IRA and bought some shares of a healthcare ETF (VHT)  at $57.30 so that I won’t try to do anymore stupid gambling with my money.

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The subprime market has officially imploded. Fremont General has physically closed its doors in their Orange County offices while looking for a buyer for their subprime lending unit. New Century is facing possibly criminal charges. Stocks of Fremont, New Century, Novastar, Countrywide and other subprime lenders have dropped like the world coming to an end. New Century went from a little over $30 to $15 to under $5 in less than a month.

Most experts saw this coming. Heck, it doesn’t take an expert to see this coming. It is only common sense to realize that someone making $30,000 a year can’t afford to pay for a $600,000 home. Even at $90,000, a mortgage for a $600,000 home will be tough.

I don’t think we have seen the worse yet as there will be certainly borrowers  with good credit will stretched the truth in their loan application in order to afford a $800,000 home.

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I met with my CPA to go over my personal and corporate taxes and we were able to reduce my taxable income enough for me to receive a refund back from the IRS.  Here are some quick tips to reduce your taxes:

• Rental Properties (does not mean buy rental properties solely for tax purposes)  – You can deduct the depreciation of these properties if you are under 100k in taxable income or if you qualify as a real estate professional then there are no real limits. A $10,000 depreciation lost can mean a savings of as much as $4,000 depending on your tax bracket. Of course the amount depreciated will have to be recapture when/if you sell unless you do a 1031 transaction.
• Self Employed/Own Your Own Business – Travel expenses to Las Vegas or to San Francisco no longer are personal expenses and *may* become a business expense if you *conduct business activities* during your trip. Your *business* trips now only cost a smaller faction of what you actually paid out.
• Contribute to SEP IRA and 401K t to reduce your taxable income.
• Take advantage of the one time phone tax credit offer. Up to $60 in tax credit which is basically free money.
• Personal property taxes
• Give to charity
• Pay your kids for doing work
• Deduct mortgage interest off your personal residence

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