My Wealth Journey

On March 29th, I talked about how you can make money off the Iran/UK situation by investing in energy stocks. Well, I was partly right as most energy stocks have gained 3-5% since. However, I was wrong in my prediction of oil dropping $5 when Iran gives in. I did take my own advice and picked up some SU and VLO and will be taking some off the table today. Can’t get too greedy. The ETF (VDE) is a good ETF to get into if you don’t want the risk of investing in just one or two energy related stock. I still believe we are due for a small pull back in the energy sector so if you are buying, don’t go all in at this point.

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It is never too early to start planning for the 2007 taxes. The max 401k contribution for 2007 will be increased by $500 to $15,500 while 2008’s limit should be close to $16,000 and 2009’s limit be around $16,500. 2008 and 2009’s limit are not set in stone yet and are determined by the cost of living increase. I doubt the cost of living, according to the IRS will be more than the 3% figure they have been using.

401k contribution is all done pretax so take advantage of reducing your taxable income, especially if you are in the higher bracket and even more so if your employer matches part of your contribution.

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The tax implications for transferring a home in California from parent to children while the parent is still alive is something families should consider and consult with a CPA or tax attorney. From my research, you are entitled to a total of $1 million of non-exempt lifetime gift before you pass away. However, as the person giving up ownership of the home, you still need to file a gift tax return with the IRS even if you do not go over the $1 million. The value of the gift is subtracted from the max federal estate tax exemption of $2 million.

A drawback of receiving the home as a gift rather than inheriting the home is that you lose the stepped up basis of the home’s value.  For example, if the home was purchased by the parent at $100,000 and is now worth $400,000. The cost basis of the home would still be $100,000. We will exclude deprecation and other related activities that may affect the cost basis for this example. That means if the children sells the home at a later date for $500,000, taxes will need to be paid on $400,000 ($500,000 minus $100,000). Had the home been inherited, the stepped basis would be the value of the home at the time of death, which in this example is $400,000. So taxes would only have to be paid on $100,000. ($500,000 – $400,000)

Also, you straight out lose control of your home which could be troublesome if you and your children no longer get along. Once you deed the title over, your children or whomever the title was deeded legally owns the home.

Disclaimer: I am not a tax expert or professional. Please do your own research and consult with a professional.

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The job report came out this past Friday and the economy added about 180,000 which drops unemployment to 4.4%! That matches the lowest in 5 years! What this means? Well, it means the chances of a decrease in interest rates will be a lot slimmer now with the bond prices rising because of this.

I expect the market to fall 1 to 1.5 points on Monday because of the decrease chances of a lower interest rate.

Residential construction jobs dropped but a lot of those workers/contractors probably went into commercial.

I know that it is definitely a good market for IT jobs in Southern California. It took me 2 days for 2 interviews and 2 job offers.

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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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