Here’s an interview with Susan Fujii, author of the personal finance blog KungFuFinance.com.  She is a certified Accredited Investor according to the SEC (Securities and Exchange Commission), placing her in the top 2% of all American investors.  She has earned returns of 100%+, participated in Private Placement Memorandums, and networked with some of the top investors and entrepreneurs in the nation and around the world.

She has a long history of learning and investing to share with you in this exclusive interview.

It seems that everyone is looking to make more money these days.  And many of the people I talk to say they need a second job.

Some people I know are even working three jobs to get by. And that’s all they are doing…getting by.

So that leads me to ask you: should you get a 2nd job or start a part-time business?

Thankfully Diane Kenney, CPA has an answer.  And it just might surprise you.

In her post Should You Get a 2nd Job or Start a Side Business? she details the many benefits of having your own side business.

The biggest difference: you can make more money AND pay less in taxes (legally!)

Here’s how taxes work for an employee:

• EARN: you earn an income
• TAX: you get taxes taken right out of your paycheck
• SPEND: you spend whatever is left

Here’s how taxes work for a business owner:

• EARN: you earn money
• SPEND: you spend it on legitimate business expenses (like your cell phone, computer equipment, etc)
• TAX: you pay taxes on whatever is left

Diane outlines 5 steps to pay less tax with a home-based business starting TOMORROW:

(1) Make sure you really have a business. The IRS wants you to be able to demonstrate that your business is a real business venture.  You need to be able to prove you’re running it in a business-like manner, are putting in the time and effort required to be an eventual success, either have previous experience doing this or are learning from others who do and that there is a profit motive.

(2) Look for your hidden business deductions.  I’m not a fan of spending money simply for the tax deduction.  Instead look for expenses you currently have that can become legitimate business expenses.

A business deduction must be ‘ordinary and necessary’ to the production of income.  Common tax deductions for home based business include home office, car expenses, computer, computer equipment, meals and entertainment, pay for work your children do, cell phone, uniforms, travel and more.   In fact, ask yourself:  What do I spend money on now that could become a legitimate business deduction?

(3) Start good record-keeping habits.  A lost receipt is a missed tax deduction.  Start off with good habits to keep track of your expenses.  One trick is to you use your smart phone to take pictures of your receipts.

(4) Estimate total business deductions. How much in deductions will you pick up each month?  $200?  $400?  $1,000?  We’ve seen clients find that much, and more, in business deductions.

(5) Change your tax withholding or estimated tax payment amount. Calculate how much the savings will be.  A quick way to estimate this is to multiple the total annual amount of deductions times your blended tax rate.  That’s the amount of total tax savings you can estimate.  Change your exemptions (W-4) to the point where the total tax is reduced by this amount.  Your payroll administrator at work will be able to help you calculate that, based on your own circumstances.

To sum it up: start your own business, and you’ll pay less in taxes and be building an asset for you, not someone else.

For more great information about taxes, and other financial topics from one of the top CPA’s in the USA, visit Diane Kennedy’s website: www.dianekennedycpa.com.

You probably have heard of the standard way to save money on food: eat out less.

And there’s a point to that statement – you can always make something for less at home.  But I’m realistic…I know this isn’t always possible (or desirable).

So let’s look at ways you can save money on food you buy regularly.

A New Way to Shop and Eat

Now for some of you this might be a new idea…so I only ask that you mentally try it on for a minute with me.

Food shouldn’t be overly complicated to buy or make.  You have enough other things to think about.

Here’s what I propose.

7 Tips to Save Money on Food

1. Eat the same foods regularly.
   • Prepare them differently. For example: A side of broccoli from a side dish one night can be used in a stir fry the next day.
2. Order auto-shipments from Amazon's Grocery Store
   • Put any foods you eat often on auto-ship with Amazon.  I do this with my cereal – you save 15% and it’s often times less expensive than the store!  Plus it gets delivered to you – one less thing to worry about.
     
3. Take advantage of sales.
   • Stock up on items you can use frequently (like pasta sauce or almond milk).  You don’t have to go overboard, though.
4. Make a list – and stick to it.
   • If you make a list ahead of time, you’ll know exactly what to grab. Oh, and make sure to only go food shopping after you’ve eaten or you’ll eat through your budget with your eyes.
     
5. Take advantage of loyalty rewards.
   • If you love a product so much that you buy it often, why not get rewarded for it?  Stonyfield has a rewards program in the USA for their dairy products that lets you use points towards future purchases of yogurt, healthy snacks, or other fun items.
6. Pay for your groceries with a cash back credit card.
   • You might as well get paid for what you’re going to buy anyway, right?  That’s smart use of leverage.
     
7. If you want to eat out – use a coupon.
   • Daily deal sites like Groupon, LivingSocial, local newspaper sites have great deals in your area for 50% off or more.  My cable company even sent me an offer in one of their emails.

Full disclosure: Affiliate links may be present that compensate this website if you purchase any products by clicking on them.

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I was at a seminar once where Bill Bartmann, a billionaire who founded a debt collection company, spoke about what it takes to become successful.

Here’s what he told us…

4 Things You Need to Be Successful at Anything

1. The only opinion of you that matters is YOUR OWN.
2. Forgive.  (You can’t go forward looking backward)
3. Everything in life is a choice.
4. Invest in yourself.
   • Success can’t happen unless YOU do something
   • People can love you and want you to be the best, but they won’t save you.

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So often rich people receive attacks for not “paying their fair share” or for being “greedy” like Scrooge in A Christmas Carol.  And there are many who are greedy.

However, many rich people are the ones providing jobs, housing, and other assets that society needs.  And for taking risks, they get rewarded by the tax man.

Leverage the Tax Laws

The rich use leverage more so than the poor and middle class – the leverage of the tax laws.  Leverage is simply the ability to do more with less.  And the tax laws they use aren’t just for the silver-spooned and well-healed.

They are available to anyone willing to learn about them.

With the spread of the internet, ignorance is no longer an excuse for not being able to “get ahead” because of knowledge only a few can afford to get: you can go to IRS.gov and look up the tax laws yourself.

1031 Tax-Deferred Exchange

The greatest tax trick of the rich is using a part of the tax code called a 1031 Tax-Deferred Exchange.  This tax law allows an investor to defer paying capital gains taxes when any money made is rolled over into a “like-kind” exchange.  An example would be exchanging a 3 unit apartment building for an 8 unit apartment building.

There is one gotcha though – this mostly applies to real estate.  It does not apply to stocks, bonds, notes, and most other assets.  Here is a link to an article from the IRS on what qualifies: 1031 Exchange.  And here is a resource page with more information about Real Estate 1031 Tax-Deferred Exchanges.

By rolling over capital gains, you can increase your cash flow for life, compounding your returns tax-deferred.  There is nothing saying you must sell any of the properties ever (which would cause you to have to pay taxes on your gains) – so you can continue deferring taxes indefinitely so long as you continue to roll it over into more property.  You could die without paying taxes on these investments!

The same cannot be said for 401(k)’s and IRA’s.  These tax-deferred accounts are taxed at Ordinary Income tax rates when the money is pulled out of them.  And currently, 401(k)s and IRAs are subject to an early withdrawal penalty if they are taken out before age 59.5…and to make it even worse, a part of the portfolio must be sold by age 70.5.

Commit to learning more about taxes and seek out a qualified CPA.  Taxes are one of your greatest lifetime expenses – learn to reduce them legally and you’ll be far richer.

Disclaimer: This website is designed to provide competent and reliable information regarding the subject matter covered. However, it is understood that the author is not engaged in the rendering of legal, financial or other professional advice. Laws and practices often vary from state to state, and if legal or other expert assistance is required, the services of a professional should be sought. The author specifically disclaims any and all liability that is incurred from the use or application of the contents of this site.

It’s possible to never pay one red cent of interest on your credit cards.

Now I know you might think this is hard to believe, but you can even make money off your credit card company.  (I hear you laughing “Yeah, right”)

Hard to believe?

Here’s how…

Credit card companies charge a fee to merchants every time you use your card – usually between 2-3%.  That’s how the credit card company makes money.

Some credit card companies offer cash back reward cards.  One card I’d recommend looking into is the Discover More card.  Another is the Chase Freedom rewards card.

These cards actually give you “cash back” – almost like a mini savings account within your credit card.  This happens when you make certain types of purchases or a percentage is credited to your cash back account based on the total charges you have in a year.

One example is the Discover More card, which lets you earn 5% cash back on gas, groceries, hotels, restaurants, and more.  For instance: Jan 1-March 1, the offer might be 5% cash back on gas restaurants.  Any purchases you make at gas stations those months will earn you 5% cash back (up to a certain limit) that will add to your cash back bonus account.  Once you reach $50 of cash back bonus, you can use it towards paying your bill. (Note: You can also use your cash back rewards towards charitable giving and/or for gift cards to online and offline retailers and restauarants)

How to Profit Off Credit Card Companies in 3 Easy Steps:

Step 1. Charge purchases that you normally would make like gas, groceries, etc.

Step 2. Have enough cash in your bank account that will fully pay off your credit card when the bill comes due every month.  This is the key to making this work.

Now many people have heard of Steps 1 and 2 being smart.  But you can actually make money off your credit card company by building up cash back bonus money…

Step 3. Use your cash back bonus as a credit on your credit card statement.

Conclusion

If you do this correctly, you are not spending any more money than you normally would otherwise, and are leveraging the credit card companies cash back incentives to make more money.  Now that’s smart leverage.

Debt seems to be a necessary evil in life.  You need it to buy a home, a car, bed, furniture, etc.  It seems like every time you turn around, there is someone offering you a way to get into debt for something.

But how do you know whether or not it’s a smart move?  You must ask yourself these two questions first:

1. “How much will it cost?” (it being the debt)
2. “Can I afford it?”

You want to know how much it will cost so you don’t end up with terms that don’t work out for you.  Like having a balloon mortgage due in 5 years after low teaser interest rates.  That didn’t work out quite well for many people in 2007-2008.

How much can you afford is a harder question. You have to consider the kind of future you want.  If you don’t want debt servitude and are willing to sacrifice a bit now, then stick with low payment conditions that don’t lock you into any long-term contracts.  Especially during periods of economic volitility.

Using the good old 80/20 rule, 80% or more of the stuff you see offered with financing is stuff you don’t really need to have.  The only three needs we all have are: food, shelter, and clothing.  Period.

So keep these two questions in mind next time you’re shopping around for debt.

Your credit score and credit reports can affect how much you pay in interest for cars, homes, and other items.  Your score can be scrutinized by landlords and employers.  Keeping it high is crucial.

There are three credit bureaus: Experian, Equifax, and TransUnion.  They each collect financial data and generate two pieces of information about you: your credit SCORE and your credit REPORT.

You are entitled to one free report annually free each of the three credit bureaus, but you usually must pay for your score.  Below, I show you how you can find out your credit score for FREE, and it’s 100% legitimate (I’ve used it myself).

NOTE: DON’T FALL FOR THE ADS THAT PROMISE YOU A FREE CREDIT SCORE.  Most of the time, they are trying to sell you a credit monitoring service.

Here’s how to improve your credit score:

1. Go to AnnualCreditReport.com (this is the ONLY 100% free credit reporting service authorized under Federal law and is the hub for all three bureaus: Experian, Equifax, and TransUnion)
   • Check just ONE of your reports from one of the bureaus.  You will do this once each four months, so create a schedule for each year and mark it in a planner: January (check Experian), May (check Equifax), and September (check TransUnion).
2. Go to CreditKarma.com and get your free credit score.  If you want to find out your score from all 3 bureaus, you can pay for them at annualcreditreport.com.
   • CreditKarma also shows you how well you “graded” in each category that makes up your score.  Review these areas and look at their suggestions for improving your score.
3. Keep your credit card balances to between 25-30% of your total available credit. The number that appears on your statement as the ending balance is what they care about (not the fluctuations during the month where you may charge a big purchase but pay it off with cash before the end of the billing cycle).
4. Do not close old credit cards. Have no more than 3 credit cards total.  I suggest getting a Visa/Mastercard and one other (Discover, Amex, etc).  This will give you maximum flexibility in case a business doesn’t accept Discover, for example.
5. Keep all your long term debts to within a range of your income, say 30-40%.  This gives you a cushion against future job loss or business decline.
6. Freeze your credit.  You can freeze your credit with each of the bureaus so that no company can look at your report – other than the institutions you already do business with.  This limits a thief from trying to open an account.  You can do this at each of the bureaus websites.
7. Check out the “Bad Credit Hotel” to learn more about maintaining your credit score: ControlYourCredit.gov

How many people do you know often thoughtlessly spend their money on items without giving any thought to what that purchase represents?

Many people shop for price alone or they shop for the things that are most popular at the time regardless of price.

Very few think about it in any way other than how their lives will be different or better short term once the items are theirs to keep, but don’t consider the impact of the decision they are making long term.

Let’s put some examples to this concept:

# 1 : Food

When you go to the store and purchase organic peppers, analytically speaking, that purchase means more than just you prefer the taste, or it was a better price. It can also mean that you support organic farming and eating healthier produce.

You could have chosen to buy French fries to go with dinner, but you chose the organic peppers instead.

# 2 : Non-Essential Habits (i.e. Tobacco Products)

You might mindlessly buy cigarettes because you can’t kick a bad habit, but buying the pack also means you support big businesses that promote lung cancer. Tobacco companies make a profit off of people coughing, having shortness of breath, high medical bills, increased pollution to our planet, and early death.

Have you ever sadly gone to visit your suffering grandmother in the hospital for emphysema due to smoking and on the ride there light up a smoke of your own?

Your visit to the hospital is sponsored by your decision to buy cigarettes.

# 3 : Books vs. Video Games

Do you support reading, education, imagination, and intelligence? Or do you support no creativity, nonessential “fun”, unrealistic portrayals of the real world, and violence?

Many parents wish for their kids to do well in school, grow up to be leaders, and lead active lives, yet they allow their kids to come home after school and play video games and watch movies when they could send them outside or encourage them to read a book about something of importance (ex: George Washington).

Take away:

Your decisions and your purchases are really a manifestation of what you think is important in life.

Next time you make a purchase or make a choice consider these questions:

• Are you buying it just because it is cheaper or easier to have?
• Is it appealing simply because other people have one just like it (I NEED an iPad, too!)?
• Are your purchases and decisions counterintuitive to what you tell people you think is important?

When was the last time you thought about your habitual consumption and what it’s saying about you?

Know What You WANT: Check Edmunds.com for the latest car details, and check Consumer Reports for their vehicle ratings so you can choose a more reliable model year.

Know WHEN to Buy: November through January are the slowest months for sales.  Aim to buy during these months – and buy at the end of the month when the salesman or dealer may be aiming to hit a sales goal.

Know WHERE to Buy: Private sales will save you from dealer markups – use Autotrader.com or eBay Motors to find local deals and compare prices.

Know WHAT to Buy: A brand new car loses 30% of it’s value the day it’s driven off the lot.  Buy used instead.  Aim for a car that’s at least 3 years old.  You’ll end up saving on registration and insurance.  Don’t forget to check Consumer Reports for used car ratings.

*NOTE: Keep in mind prices are based on supply and demand at any given time.  Make sure to shop for a car in advance of needing one so you don’t make a quick decision that costs you money.